Me. Unemployment Comp. Comm'n v. Androscoggin Junior, Inc.

• Decision Date: 07 November 1940
• Citation: 16 A.2d 252
• Parties: MAINE UNEMPLOYMENT COMPENSATION COMMISSION v. ANDROSCOGGIN JUNIOR, Inc. SAME v. HEALY. SAME v. CONQUEST.
• Court: Maine Supreme Court

16 A.2d 252

MAINE UNEMPLOYMENT COMPENSATION COMMISSION

v. ANDROSCOGGIN JUNIOR, Inc.

SAME

v. HEALY.

SAME

v. CONQUEST.

Supreme Judicial Court of Maine.

Nov. 7, 1940.

[Copyrighted material omitted.]

Report from Superior Court, Kennebec County.

Actions by the Maine Unemployment Compensation Commission against Androscoggin Junior, Incorporated, against Edward M. Healy, and against E. J. Conquest, to recover contributions allegedly due under the Unemployment Compensation Law. On report on agreed statement.

Judgments for plaintiff.

Argued before BARNES, C. J., and STURGIS, THAXTER, HUDSON, MANSER, and WORSTER, JJ.

John S. S. Fessenden, Asst. Atty. Gen., and Harvey R. Pease, of Wiscasset, for plaintiff.

Nelson, Wilson & Nelson, of Augusta, and James D. Maxwell, of Bangor, for defendants.

HUDSON, Justice.

On report. These three actions, based on Sec. 14(b) of the Maine Unemployment Compensation Law (P.L.1935, Chap. 192, as amended), were brought for the purpose of collecting unemployment contributions. It is stipulated that in each due notice was given and payment demanded.

The Healy Cases.

For many years before 1936, Mr. Healy owned and operated a boys' camp known as Camp Androscoggin. That year he and two of his camp counsellors organized a corporation known as Androscoggin Junior, Inc., for the purpose of creating and operating a separate camp for younger boys. Mr. Healy was to continue to carry on the senior camp as before and the corporation was to maintain and operate the junior camp.

The capital stock authorized was $50,000, consisting of five hundred (500) shares of the par value of $100. each. Its officers consisted of three directors, president, vice president, treasurer, secretary, and clerk. Under its by-laws, it was provided that the board of directors had the power to fill vacancies and declare dividends, as well as to control and manage the business. The president, Mr. Healy, was the "chief executive officer and head of the Company" and in the recess of the board of directors was given the general and active management of the company's business and affairs. Without the order of the board, duly entered in the minutes, no agreement, contract, or obligation (other than a check) for more than $100 could be made. Checks were to be signed by the treasurer and countersigned by the president and notes, signed by the president or vice president and the treasurer. All contracts required the signature of the president. The three incorporators were elected directors.

Of the stock issued, Mr. Healy received one hundred thirty-five (135) shares and the two counsellors, thirty-two and one-half (32 1/2) each, so that Mr. Healy owned sixty-seven and one-half per cent (67 1/2%) of the outstanding stock.

In January, 1937, the company employed men to clear land preparatory to erecting necessary buildings for the camp. In April, 1937, it contracted for the erection of the buildings. It opened for business on June 30, 1937. During 1937, sixteen of the thirty-two weeks in which the company employed eight or more employees were entirely devoted to building the camp and in preparing to go into the business of operating; ten, to conducting the camp and closing it for the winter; and the remaining six, to preparing ground for the season of 1938.

In 1938, the company did not employ eight employees so as to come under the law of eight under the Act. Nor did Mr. Healy, as proprietor of the senior camp, in 1937 or 1938 employ eight workmen. If he and the company were treated as a single unit, eight or more persons were employed in 1937 but not in 1938.

The company's contributions for 1937 were paid. The plaintiff now seeks to recover contributions from the company for the year 1938. The plaintiff's contention is that it is entitled to recover these contributions from the company because it was an employer under the Act in 1937 and continued to be an employer in 1938 since it failed to terminate its status as provided in Sec. 8(b) of the statute. Also see Sec. 19(f) (6).

From Mr. Healy it claims the right to recover contributions in 1937 because, although he did not employ eight or more under the Act that year, he had common control of both camps and it says that they constituted an employing unit which, considered as a single unit, employed eight or more in 1937. As to 1938, it contends that Healy was an employer because he failed to terminate his liability as provided in Sec. 8 (b) of the statute. Also see Sec. 19(f) (6).

The defendants in each case pleaded the general issue and specially that if they were indebted as plaintiff declared under the statute, the statute was in violation of the State and Federal Constitutions.

Sec. 7, Contributions, (a) Payment (1) provides:

"On and after January 1, 1936, contributions shall accrue and become payable by each employer for each calendar year in which he is subject to this act, with respect to wages payable for employment (as defined in section 19(g)) occurring during such calendar year. * * *"

Sec. 19, Definitions (d), provides:

"'Contributions' means the money payments to the state unemployment compensation fund required by this act.

"(e) 'Employing unit' means any individual or type of organization, including any partnership, association, trust, estate, joint stock company, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor thereof, or the legal representative of a deceased person, which has or subsequent to January 1, 1935, had in its employ 1 or more individuals performing services for it within this state. All individuals performing services within this state for any employing unit which maintains 2 or more separate establishments within this state shall be deemed to be employed by a single employing unit for all the purposes of this act. * * *

"(f) 'Employer' means: (1) Any employing unit which for some portion of a day, but not necessarily simultaneously, in each of 20 different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment, 8 or more individuals (irrespective of whether the same individuals are or were employed in each such day); * * *

"(4) Any employing unit which together with one or more other employing units, is owned or controlled (by legally enforcible means or otherwise) directly or indirectly by the same interests, or which owns or controls 1 or more other employing units (by legally enforcible means or otherwise) and which, if treated as a single unit with such other employing unit, or interests, or both, would be an employer under paragraph (1) of this sub-section: * * *

"(6) Any employing unit which, having become an employer under paragraph (1), (2), (3) or (4), has not, under section 8, ceased to be an employer subject to this act; * * *."

Par. (g) (1) of said Sec. 19 provides: "Except as otherwise provided in this subsection (g), 'employment' means service, including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied."

In Par. (g) (6), it is stated that:

"Services performed by an individual for remuneration shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that

"(A) such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

"(B) such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

"(C) such individual is customarily engaged in an independently established trade, occupation, profession or business."

Defending counsel first argues that the company did not remain an employer under the act and was "not required to contribute thereunder for two consecutive years where the operation of its business at no time" came "within the terms of the Act and the only basis for its inclusion thereunder" was "distinctly non-repetitious employment, exclusively devoted to organization and construction in the first year of its existence," and if so, that the Act is unconstitutional.

Thus at the outset the question is raised whether a company that employs labor for the purpose of construction of its plant is an employer under the Act. The statute makes no distinction between employees who work on original construction and those who labor in the plant's subsequent operation. Considering the purpose of the Act and the benefits expected to be conferred, we do not consider that the legislature intended that there should be any such distinction. An employee out of work is as much in need of assistance through the agency of this law whether he has ceased working on original construction or in later operation. Sec. 19(g) (1) states that, "Except as otherwise provided in this subsection (g), 'employment' means service," and we fail to see how this work in original construction comes within any exception in subsection (g).

The 1937 contribution, however, was paid. What is sought here from the company is payment for 1938, during which year it was not an employer under the rule of eight. For 1938 it can be held to contribute only if by operation of the law it was then an employer. The plaintiff says it was, because of Sec. 8(b), which provides a right for the company before a certain date to file a written application for termination of coverage, which it failed to do. Failure so to do continued its status as an employer under the Act for 1938, although that year it did not actually employ the required eight either alone or jointly with Mr. Healy in his operation of the senior camp.

This carry-over provision of said Sec. 8(b) we consider reasonable and proper. It is...